PROPERTY experts have called for a national star rating system to protect buyers from losing out when banks suddenly shift their lending criteria.

Macquarie Bank is the latest to tighten lending for apartments, with a leaked list of “risky postcodes” throwing into question the viability of new projects in a long list of suburbs across the nation.

Sydney’s Waterloo, Melbourne’s South Yarra and Brisbane’s CBD are among the neighbourhoods hit with a requirement for a 30 per cent upfront deposit amid oversupply concerns, The Australian has revealed. The new lending criteria applies to both new and established apartments. Scroll down for the full list of suburbs.

There are fears of an apartment glut in Sydney and Melbourne, with Aussie Home Loans boss John Symond warning that prices may plummet by as much as 20 per cent.

It’s a confronting prospect for the would-be first home buyers, or “rentvesters” looking to apartments as a way to get a foothold in the property market.

NAB has also cracked down on mining towns in Queensland and Western Australia, while Westpac has loosened its general lending criteria to investors, bringing it back into line with the other banks.

CALL FOR TRANSPARENCY

Buyer’s advocate Gavin McPherson of Oasis Property said it was time for banks to pull back the curtain on their risk profiling, and give customers vital information about how they view the suburbs and property classes for which they are lending.

“Banks are making the right decision, but isn’t it unfair to the guy who bought an apartment in one of those suburbs last week and didn’t have that rule?” Mr McPherson said.

“They were happy to lend on it yesterday but not today, and that’s not fair ... The victims are the buyers, they’re not privy to the last six months of decisions saying ‘that suburb is getting a bit risky’.

“If you’re buying to invest then you expect capital growth, but you won’t get capital growth if banks don’t support the lending in that area.”

Mr McPherson said the banks should not lump low-rise developments together with towers on the Gold Coast. Picture: David ClarkSource:News Corp Australia

He called for a quarterly star rating system that quantified the bank’s risk profile for each suburb and dwelling type as a score from zero to 10.

“Then if the bank says ‘we’re going to give it another star now, because we see risk increasing — when you get to eight stars, we’re pretty much going to pull stumps’, isn’t that fair?”

The buyer’s agent, who specialises in identifying high capital growth investment strategies, avoids high rise developments as a rule and largely agreed with Macquarie Bank’s list.

“We never invest in those suburbs or any areas that are prone to overdevelopment,” he said.

“I could include other suburbs, like Hurstville, all up the Canterbury line [in southwestern Sydney], all up the Pacific Highway to Hornsby, and possibly including Hornsby.”

Mr McPherson said the big banks’ crackdown on foreign investors meant there were also “some potential dangers signs” in Chatswood, a popular spot for Chinese buyers.

But, he argued, Macquarie was being “a little too quick to hop onto the Gold Coast and Surfers Paradise” and should be careful to distinguish between high-rise and smaller blocks, as the latter were in high demand.

STAR RATING ‘THE WAY TO GO’

Property Analyst Louis Christopher, of SQM Research, agreed a star rating system would be helpful.

While he disagreed with Macquarie Bank’s assessment of Docklands, saying that vacancies were actually falling in the inner-Melbourne suburb, Mr Christopher said vacancy rates in Brisbane were “well and truly elevated”.

He said the impact of lending restrictions on new apartment developments was yet to play out, with a number of high-rise developments expected to be cancelled or put on the shelf as funds dried up.

Developers were concerned about the increased settlement risk that arose when banks tightened the rules, with those buyers who may have put off sorting out finance potentially unable to secure a mortgage.

“The impact of credit rationing in the sector is that we’ll see rents rise over the next few years in these areas,” Mr Christopher said.

NAB has also cracked down on mining towns in Queensland and Western Australia, while Westpac has loosened its lending criteria to investors, bringing it back into line with the other banks. Home buyers planning to rent out their properties can now do so with a 10 per cent deposit with the bank, down from 20 per cent.

Finance Brokers Association of Australia President Peter White said Macquarie Bank’s list of risky suburbs may be more of a reflection of the diversity of the bank’s portfolio, and did not necessarily reflect the views of other lenders.

It is understood Australia’s biggest lender, the Commonwealth Bank, does not have a specific lending policy for apartments in high-density suburbs.

A spokesman for ANZ said the bank had not imposed new rules for apartments, but regularly reviewed its lending policies “to ensure they are in line with our risk appetite, and appropriately set for the broader economic and regulatory environment”.

Westpac provided an almost identical statement, adding that the bank applied “sound underwriting” to its loans, which must include mortgage insurance if the deposit is less than 20 per cent.

A spokeswoman for NAB said home loan applications for inner-city apartments were “considered on a case-by-case basis” while being subjected to “strict and rigorous checks”.